This bill, known as the FRAUD Act, establishes a new requirement for specific state officials to report instances of fraud involving federal funds. Within 180 days of receiving a fraud warning —defined as a written allegation of misuse, theft, diversion, or improper expenditure of at least $250,000 in federal funds, supported by evidence—a covered official must report it to the Director of the Federal Bureau of Investigation. Covered officials include a State's Governor, heads of state agencies administering federal funds, and State Inspectors General. To ensure compliance, the chief executive of a State must certify to federal agencies that their state's covered officials have substantially met this reporting duty during the previous fiscal year, as a condition for receiving future federal funds. Knowingly violating this reporting mandate or obstructing any investigation into such fraud constitutes a federal offense, punishable by fines, up to 10 years imprisonment, or both. Furthermore, federal agencies may debar officials convicted of such offenses from overseeing the distribution of federal funds. The bill clarifies that it does not authorize the federal government to remove state officials from office or violate principles of federalism.